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    AOM 2023-004 Understated Due To NGA

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    Kean Fernand Bocabo
    The Commission on Audit found that the Municipality of Abuyog, Leyte had understated its Due to NGAs account balance in the Trust Fund by 25,245,050 pesos. This was due to erroneous deductions made from the account for disbursements that were not yet liquidated or had fund utilization reports submitted to the source agency. Specifically, 25,245,050 pesos worth of disbursements for typhoon relief goods and cash advances had been deducted from the Due to NGAs account as income, despite the lack of liquidation. The audit recommends reversing the erroneous entries and recognizing income only after proper liquidation and submission of reports to the source agencies.

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    AOM 2023-004 Understated Due To NGA

    Uploaded by

    Kean Fernand Bocabo
    229 views4 pages
    The Commission on Audit found that the Municipality of Abuyog, Leyte had understated its Due to NGAs account balance in the Trust Fund by 25,245,050 pesos. This was due to erroneous deductions made from the account for disbursements that were not yet liquidated or had fund utilization reports submitted to the source agency. Specifically, 25,245,050 pesos worth of disbursements for typhoon relief goods and cash advances had been deducted from the Due to NGAs account as income, despite the lack of liquidation. The audit recommends reversing the erroneous entries and recognizing income only after proper liquidation and submission of reports to the source agencies.

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    AOM 2023-004 Understated Due to NGA

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    The Commission on Audit found that the Municipality of Abuyog, Leyte had understated its Due to NGAs account balance in the Trust Fund by 25,245,050 pesos. This was due to erroneous deductions made from the account for disbursements that were not yet liquidated or had fund utilization reports submitted to the source agency. Specifically, 25,245,050 pesos worth of disbursements for typhoon relief goods and cash advances had been deducted from the Due to NGAs account as income, despite the lack of liquidation. The audit recommends reversing the erroneous entries and recognizing income only after proper liquidation and submission of reports to the source agencies.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    229 views4 pages

    AOM 2023-004 Understated Due To NGA

    Uploaded by

    Kean Fernand Bocabo
    The Commission on Audit found that the Municipality of Abuyog, Leyte had understated its Due to NGAs account balance in the Trust Fund by 25,245,050 pesos. This was due to erroneous deductions made from the account for disbursements that were not yet liquidated or had fund utilization reports submitted to the source agency. Specifically, 25,245,050 pesos worth of disbursements for typhoon relief goods and cash advances had been deducted from the Due to NGAs account as income, despite the lack of liquidation. The audit recommends reversing the erroneous entries and recognizing income only after proper liquidation and submission of reports to the source agencies.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 4

    REPUBLIC OF THE PHILIPPINES

    COMMISSION ON AUDIT
    REGIONAL OFFICE NO. VIII
    LGAS C –Leyte II and Biliran Province
    New Ormoc City Hall
    Ormoc City, Leyte

    Team R8-03, Abuyog, Leyte

    AOM No.: 2023-004


    Date : May 18, 2023

    AUDIT OBSERVATION MEMORANDUM

    Hon. Octavio J. Traya, Jr.


    Municipal Mayor
    Abuyog, Leyte

    Attention: Ms. Michelle L. Efren


    Municipal Accountant

    We have audited the Due to NGAs account of the Municipality of Abuyog and
    observed the following deficiencies/errors:

    1. The Due to NGAs account balance in the Trust Fund is understated by


    ₱25,245,050.00 due to erroneous deductions made from the account even
    without liquidation and submission of fund utilization report to the source
    agency, contrary to Section 111 (2) of Presidential Decree No. 1445 and COA
    Circular No. 94-013, affecting the fair presentation of the accounts in the
    year-end financial statements.

    1.1. Section 111 (2) of PD 1445 provides that the highest standards of honesty,
    objectivity and consistency shall be observed in the keeping of accounts to
    safeguard against inaccurate or misleading information.

    1.2. COA Circular No. 94-013 dated December 13, 1994 provides that funds
    transferred to LGUs from National Government Agencies (NGA) should be
    properly taken up in the books of both agencies, used only for the purpose
    intended, and properly accounted and reported.

    1.1 COA Circular No. 2015-009 dated December 1, 2015 prescribed the Revised
    Chart of Accounts for LGUs to conform with the adoption of the Phil. Public
    Sector Accounting Standard (PPSAS).

    AOM NO. 2023-004 Overstated Due to NGAs-Abuyog,Leyte Page 1 of 3


    Due to National Government Agencies
    2-02-01-050
    Credit
    This account is used to record the receipt of funds for delivery of
    goods/services as authorized by law, fund transfers from NGAs for
    implementation of specific programs or projects and other inter-agency
    transactions. Debit this account for delivery of goods/services, liquidation of
    funds received and settlement of liabilities.

    1.3. The Due to NGAs account in the Statement of Financial Position – Trust Fund as
    of December 31, 2022 reflected a balance of ₱20,291,440.23. However, review of
    financial records revealed that the said account in the Trust Fund is understated
    by ₱25,245,050.00 due to erroneous recognition of income on the following
    disbursements and deducting the said amount from Due to NGAs, despite being
    not liquidated yet, as shown in table 1:
    Table 1. Disbursements deducted from Due to NGAs and recognized as income as of December
    2022

    Fund Check Check Payee Particulars Amount


    Date No.
    Purchase of
    Doreen's
    Commercial Rice used
    Agrivet
    for the Relief of
    Supply & 1,760,000.
    1/20/222 4203587 Typhoon Odette
    Gen 00
    Victims last
    Merchandis
    December 16, 2021
    e
    Financi (800 Sacks)
    al To Cash Aadvance for
    Assista REFUGIA Payment of Financial
    21,153,000.
    nce to 2/2/2022 4203593 AMARILL assiatance to all
    00
    LGUs E affected Typhoon
    affected Odette (AYUDA)
    by Doreen's
    To record payment for
    Typhoo Agrivet
    purchase of additional
    n Supply & 1,760,000.
    3/3/2022 4203599 Rice for Relief of
    "Odette Gen 00
    Typhoon Odette last
    " Merchandis
    12/16/2022
    e
    To record payment for
    JUST IN purcahse of various
    572,050.
    3/14/2022 4203601 ENTERPRI construction materials
    00
    SES for the victims of
    Typhoon Odette
    Total 25,245,050.00

    AOM NO. 2023-004 Overstated Due to NGAs-Abuyog,Leyte Page 2 of 3


    1.4. For CY 2022, journal entries were made debiting Due to NGAs and crediting
    Subsidy from National Government in the amount of ₱25,245,050.00 for the
    disbursements mentioned above. However, as of December 31, 2022, the LGU
    has not yet liquidated the disbursements, and no Fund Utilization Report has been
    submitted to the source agency.

    1.5. Interview with the Municipal Accountant revealed that they have made such
    deductions from the Due to NGAs account whenever PPAs for specific financial
    assistance have been completed for monitoring purposes and only submit
    liquidation reports whenever the source agencies demands for it.

    1.6. However, it should be noted that income is recognized only when the purpose for
    which the fund was received has been completed or implemented and a
    corresponding FUR for the same is submitted to the source agency. The
    aforementioned disbursements should still be included in the Due to NGAs
    account until liquidation has been made and the corresponding FUR is submitted.

    1.7. Due to the noted deficiency, the Due to NGAs account was understated by
    ₱25,245,050, thus adversely affecting the fair presentation of the year-end
    financial statements.

    1.8. We recommend that the Municipal Accountant make correcting entry to


    revert the amount of ₱25,245,050 to the Due to NGAs account and recognize
    income only upon liquidation.

    May we have your comments on the foregoing audit observations within five (5)
    calendar days from receipt hereof.

    MA. SHIELA T. ELMIDO


    State Auditor II
    OIC Audit Team Leader

    SANTIAGO P. SEÑASE
    State Auditor IV
    OIC Supervising Auditor

    Proof of Receipt of AOM:


    Name of Receiving
    Officer Signature Date Received
    Officer
    Municipal Mayor
    Municipal Accountant

    AOM NO. 2023-004 Overstated Due to NGAs-Abuyog,Leyte Page 3 of 3


    AOM NO. 2023-004 Overstated Due to NGAs-Abuyog,Leyte Page 4 of 3

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